Brussels, 13/06/2012 (Agence Europe) - Recent developments in the debt crisis in Greece, Spain and new threats for Italy, a combination of measures to relaunch growth alongside budgetary austerity measures, banking union, financial transaction tax, Eurobonds - all of these subjects are very likely to be discussed by the Italian prime minister, Mario Monti, and the French president, François Hollande, who will visit Rome on Thursday 14 June.
This meeting comes a few days before the one to be held by the two leaders on 22 June, also in Rome, with the German chancellor, Angela Merkel, and the Spanish prime minister, Mariano Rajoy. On the same day, the Ecofin Council will meet in Luxembourg ahead of the summit of heads of state and government (28-29 June), with Italy, like Spain, appearing once again to be facing speculative attacks on its markets. Italian 10-year bond rates have once again risen above the 6% mark and the differential compared to German rates has reached more than 460 base points.
The two leaders see eye to eye on many points and wish to work together to make concrete proposals to put to their partners to fight the crisis.
Both recommend the need for rapid recovery of growth in the EU on top of budgetary discipline, unlike Germany, which would prioritise the unconditional ratification of the budgetary pact over this recovery. It is, however, by no means certain that their points of view coincide entirely on the concrete measures to be considered. Whereas François Hollande is in favour of growth based mainly on demand and stimulated by public expenditure, the Italian prime minister is more in favour of liberalisation, particularly in the energy and transport sector, fighting corporatism and some deregulation of the employment market. On this point, he is closer to the measures recommended by the German chancellor and sees himself as a midpoint between the positions of his two partners.
Eurobonds. Both plead in favour of the issuing of eurobonds in the eurozone, to partially pool the debts of the countries of the eurozone and to protect the more fragile economies from speculative attacks. Germany opposes this, prioritising a greater integration by means of creating a genuine budgetary union, involving more competences for Brussels. Both also recommend a banking union, with “integrated” supervision. Hollande and Monti will probably seek to define a common position on these two points.
Lastly, the two leaders argue in favour of a financial transaction tax (FTT), but with a few differences. Whereas France prefers a unilateral application of the FTT, even by a relatively low number of countries to start with (readers may recall Nicolas Sarkozy's initiative on this), Italy and Germany take the view that a tax of this kind cannot be applied unilaterally and requires a broader framework. According to the Italian government, the ideal solution would be to apply it at G20 level, at the very least at the level of the 27 or, if this is not possible, the 17 countries of the eurozone.
On the eve of the Franco-Italian summit, the German finance minister, Wolfgang Schaüble, said in an interview with the Italian daily newspaper La Stampa that he welcomed the close collaboration between Italy and France and that he would do “his best to work with President Hollande”, relying on the Italian prime minister to “convince Hollande of the need to step up European integration”. He also praised the Italian prime minister's policy of rigour and reforms, saying that there was no danger of the crisis spreading to Italy if the country continued to follow the path traced out by its prime minister. (FG/transl.fl)